Connect with us


Japan challenges China, approves record defence budget



Japan has increased its defence budget with hawkish Prime Minister Shinzo Abe signing off a record 5.13 trillion yen (£35.2bn, $43.6bn) for military spending  for the fiscal year  starting 1 April 2017 .

This has been done in the face of territorial disputes with China and regional tensions arising out of North Korea’s nuclear and missile threats.

As the new combat scenario has emerged of not getting directly involved  into the war theatre from a close proximity, Japan concentrates military spending on fighter jets ,submarines with a separate coastguard budget .Abe revised Japan’s pacifist post-war defence posture  by allowing its troops for collective self-defence .

To play bigger roles in East and Southeast Asia  because of disputes with China on South China Sea islands , Abe has specifically focused on Coastguard budget  to increase security around the disputed islands by allocating a record 210 billion yen that includes patrol ships and 200 additional personnel .

With China challenging the regional order by aggressively flexing its maritime military might and asserting sovereignty over almost all of the South China Sea .And with US President elect Donald Trump asking Japan to acquire nuclear assets  to safeguard their interests and to foot their own bills for defence. Japan having increased its military expenditure is also playing out smart diplomacy by boosting defence ties with the Philippines, Vietnam and other Southeast Asian nations which are also claimants to the islands in the South China Sea.

Moreover with rising global military expenditure, France and Australia signed an agreement to build the world’s largest diesel-electric version of the Barracuda-class nuclear submarines in the Australian town of Adelaide worth 56 billion Australian dollar.

This phenomenon of enhancing defence budgets will continue in view of high tensions among big powers , geopolitical instability and terror threat from Islamic world , India spent $50.6 billion in 2016  on defense surpassing Russia and Saudi Arabia  to move into fourth place in the global charts.

arti bali

By : Arti Bali Senior Journalist


India has survived as a single political entity because of democracy




Why, despite the differences and the almost continuous trouble in one or other part of India, has the country (India) survived as a single political entity?

The answer in one word is democracy. India’s experiment with democracy has been unique, not only due to the size of the electorate and the number of political parties, but because it has tamed and ‘Indianised’ it. The Westminster model of parliamentary democracy has been transformed into the Raisina model. Reforms to achieve social equality have taken place through the election process-vote banks rather than direct, unilateral executive action which has historically been more common-as for example when Kemal Atatürk reformed Turkey during his tenure as the President.

There is no evidence that democracy existed in ancient India. There were republics in parts of what are now Uttar Pradesh and Bihar. These were territories which had no kings but the rulers were an oligarchy. But these rulers were not elected by all the people. Indeed the idea of equal rights to elect rulers would be strange to a hierarchical social order.

These were oligarchies rather than monarchies, republics rather than democracies. Even in panchayats, whether for a caste or a village, it was very much the older, more powerful men (and exclusively men) who were the panch. We see that today in khap panchayats. Khap panchayats are committees of elders of a jati which lay down the conventions of good behaviour for members of that jati. Democracy is quite different from republicanism. Great Britain has been a democracy without being a republic.

The most radical act of the members of the Constituent Assembly was the decision to grant universal adult franchise. They themselves had been elected by an electorate which was highly restricted. There were several arguments which could have been advanced against universal adult franchise. Illiteracy, for example. Only 12 percent of Indians were literate at the time of Independence. (Now the rate is 75 per cent.) Moreover, across the world, few countries had given women the vote by 1947. The UK achieved full female suffrage only in 1928 and France in 1946. India granted women the vote immediately, without any previous experience of women voting. High or low caste, savarna and Dalits, tribals and mainlanders-all got to vote as long as they were adults. The orthodox theory of Ram Rajya would never have sanctioned such equality. It was a profound, egalitarian move.

The choice of democracy with full adult franchise was not an accident. In the official reforms, franchise had been kept restricted. But the Indian National Congress was converted from an elite gathering into a mass party by Gandhi once he became its leader in 1921. With him at the helm, the Congress gave every ordinary member a right to vote at the local level to elect their representatives in higher Congress bodies. Congress practised universal adult franchise for all its paid-up (4 annas/25 paise) members and then naturally extended it to all when it came to power.

There was also another factor which has been downplayed in the history of the independence movement. This was the experience political leaders acquired by participating in the official legislatures. They included leaders such as Gopal Krishna Gokhale, Sir Srinivas Shastri, Chittaranjan Das, Motilal Nehru, Tej Bahadur Sapru and Vithalbhai Patel, all of whom were seasoned parliamentarians. The electorates were small, the elected Indians had little power, the agenda was controlled by the executive (this still remains the case in independent India’s Parliament). But the participants learnt about procedure on how to frame and pass legislation, debate budgets and so on. The short-term split in the independence movement between the constitutional and the agitational sides took place in 1921, when Gandhi issued the call for non-cooperation, and ended in 1937, when Congress took part in the legislatures.

During that period, the Swaraj Party started by Congress leaders such as C.R. Das and Motilal Nehru participated in the elections. By the time of Independence, in fact, there were many leaders who had become seasoned parliamentarians. Some like Har Bilas Sarda achieved their goal of reforming society by having an Act passed. The Sarda Bill was introduced in 1927 in the Central Legislative Assembly and passed as the Sarda Act in 1929, prohibiting child marriage. India was ready for a parliamentary democracy, British style.

(Noted public intellectual, professor of Economics and an active member of the British Labour Party since 1971, Meghnad Desais latest book “The Raisina Model” (Penguin/Rs 499/208 pages) offers a critical and frequently uncomfortable mediation on Indias contemporary political culture. Presented here is an exclusive extract from the book:)

By : Meghnad Desai

(Extracted from “The Raisina Model” by Meghnad Desai, with permission from Penguin Random House India)

Continue Reading


It’s best to steer clear of Bitcoins lest the bubble bursts

Either when the speculative run ends or governments decide to regulate, the Bitcoin dream run is bound to come to an end. It is best to steer clear of the dreaded eventuality.



Bit Coin

It is impossible to make sense of the Bitcoin-mania that has been making waves of late.

In just a span of one year, the crypto-currency has doubled four times. The price of one Bitcoin in early January was $1,000 (almost Rs 64,000). It rose to $2,000 by May. In August, it breached $4,000. By late November, it was $8,000 and, two weeks later, it had crossed $16,000. Nothing short of a bubble can explain such an astronomical run. In fact, most recently, the market valuation of Bitcoin in South Korean markets briefly surpassed that of JP Morgan, the world’s largest bank.

The Bitcoin bubble is quite reminiscent of the myriad bubbles in global economic history beginning with the infamous Tulipmania of the 1600s. The tulip bulb bubble occurred in Holland during early 1600s when competing for the rarest tulip bulbs became a status symbol and speculation eventually drove its price to the extremes. At its peak, the price of tulip bulbs rose as much as 1,100 percent in a month. All of this came to an abrupt end in 1637 when prices dropped to an extent that bulbs began trading at a fraction of what they once had, miring many in financial ruin. All bubbles end in a similar fashion. Only the extent differs.

Olivier Blanchard and Mark Watson, in their 1982 paper “Bubbles, Rational Expectations and Financial Markets”, explain why assets like gold, just like Bitcoins, are prone to evolve into bubbles. First, gold acts as a hedge against inflation. This, however, is not true in the case of Bitcoins. The second reason that Blanchard and Watson give for a regular gold frenzy is that people base their choices on whether or not to hold an asset based on past returns rather than market fundamentals. Therefore, investors who witness a rise in asset prices believe that they can hold on to it themselves as long as it appreciates and get out of the market before the market crashes.

The latter reason holds true in the case of Bitcoins, which are largely being driven by such speculation. Even though the Blockchain technology behind the currency is revolutionary and could very well be the Next-Big-Thing, it does not explain the astronomical 16-fold rise that it has displayed this year. It would make sense if this trend were occurring in light of a broader loss in confidence in fiat money. But this is clearly not the case in the current global economic scenario, which finally seems to be picking up.

It can also be argued that since central banks have been practicing easy monetary policy since the crisis to revive economic activity, asset prices have displayed an upward trend. Therefore, in a market where stocks, bonds and other such assets are overvalued, Bitcoin is not an exception. Its rise can be merely a hedge against oncoming interest rate hikes. But, that does not explain why the rise in gold prices has not been similar. In fact, the rise in gold prices has been lower than that in stocks.

There is an additional aspect of the Bitcoin that might explain its widespread appeal: the anonymity involved in its transactions. Bitcoin transactions can be made securely without revealing one’s identity, which makes it easy to bypass the government eye altogether. If true, the rise of Bitcoins could point to a disturbing trend of breakdown of global institutions. The Bitcoin craze can be seen in conjunction with a spate of shocking election outcomes that have been witnessed globally which reflect a larger loss in confidence in institutions that have guided growth.

However, in such a case, the longevity of the currency will be dependent on the government’s appetite to allow such transactions. It is hard to imagine governments allowing large-scale anonymous transactions that evade any taxation and enable criminal activity. China has already banned the currency. On the other hand, Japan has made it legal tender in an attempt to become the global centre of fintech. The jury is still out on what course governments across the globe will take. American economist and chess Grandmasster Kenneth Rogoff put it best recently when he said: “The long history of currency tells us that what the private sector innovates, the state eventually regulates and appropriates.”

Either when the speculative run ends or governments decide to regulate, the Bitcoin dream run is bound to come to an end. It is best to steer clear of the dreaded eventuality.

By : Dr. Amit KAPOOR

(Dr. Amit KAPOOR is chair, Institute for Competitiveness, India. The views expressed are personal. He can be contacted at [email protected] Chirag Yadav, senior researcher, Institute for Competitiveness, India has contributed to the article)

Continue Reading


PM Modi  on the horns of a  dilemma



PM Modi addresses at a Public meeting in Hyderabad

Prime Minister Narendra Modi appears afraid that his  post may slip out of his hands as he is surrounded by simultaneous unfavorable developments at the same time such as  the permanent deployment of about 1,600-1,800 Chinese troops in the Doklam region of the Sikkim-Bhutan-Tibet trijunction, the rise of left alliance government in Nepal  and an unusual combative mood adopted by the Congress in Gujarat assembly elections when Congress president Rahul Gandhi is openly saying that Modi will not be humiliated while being ousted from power.

The situation appears so precarious for PM Modi that he has been speaking much about himself during campaigning rather than talking on Gujarat issues or common man’s problems.

PM Modi had accused  Congress leaders of secretly meeting the former foreign minister of Pakistan and its envoy at Mani Shankar Aiyar’s house. He had alleged that the “three-hour secret meeting” was attended by former PM Manmohan Singh, and former Vice-President Hamid Ansari and further charged that the Congress and certain entities in Pakistan may be working together to prevent the BJP from winning Gujarat.

Modi is so demoralized that he is even saying Ahmed Patel is being tipped for becoming the Chief Minister of Gujarat. PM looks so desperate  and nervous that he is visualizing a situation where former Indian Army Chief Deepak Kapoor and Kurshid Kasuri and Pakistan High Commissioner and other political leaders of the Congress and some diplomats are seen as conspiring to undermine his position.

Former PM Manmohan Singh fiercely attacked Modi saying “the Congress needs no sermons on nationalism from a party and prime minister whose  compromised track record on fighting terrorism is well known…Let me remind Narendra Modi that he had gone to Pakistan uninvited after the terrorist attacks in Udhampur and Gurdaspur. Let him also tell the country the reason for inviting the infamous ISI of Pakistan to our strategic Air base in Pathankot to  investigate a terror attack that emanated from Pakistan.”

Manmohan even asked the Prime Minister to show some maturity and gravitas as expected of the high office he holds instead of concentrating his energy solely on erroneously conceived brownie points.

Congress leadership has never been so combative in criticising  on the issues raised by the BJP President Amit Shah and PM Modi on daily basis.

Meanwhile, Modi feels that his foreign policy of forming strong ties with neighbouring countries has failed miserably as the Left alliance in Nepal that could bring former Nepalese prime minister K.P. Oli again in power is no good omen for India as his alliance is heavily weighed in favour of China.

Moreover, China is a direct military threat to India especially in the wake of border disputes and Beijing is taking revenge of the earlier Doklam standoff that ended on August 28.


By: Arti Bali

Senior Journalist

Continue Reading

Most Popular